Measure would impose debt limit on municipal utility's start-up costs

By Erica Meltzer, Camera Staff Writer

Posted:
07/19/2013 04:01:43 PM MDT

Boulder may present voters with an alternative ballot measure this November that would impose a debt limit on the start-up costs of a city-run utility and require that city and county customers be charged the same rates for their electricity.

But the measure unveiled Friday would not give voters a say over future debt and does not allow residents of unincorporated Boulder County who would be customers of a city utility to vote in debt limit elections, the way that a citizen initiative backed by Xcel Energy would.

Proponents of a Boulder-run electric utility have maintained that the citizen initiative is a backdoor way to "kill" municipalization, while backers of the initiative say they just want voters to have a say in the obligations that any future city utility takes on.

In a memo to the City Council from the Boulder City Attorney's Office released Friday, officials said the alternative language is aimed at addressing some of the concerns about debt and county representation while blocking what those officials believe to be harmful measures that would restrict the utility's ability to operate in a prudent manner.

Boulder's city clerk on Friday qualified the citizen measure for the ballot. If the City Council decides to place the alternative measure on the November ballot as well, the one that gets the most "yes" votes wins.

Katy Atkinson, a spokeswoman for Voter Approval of Debt Limits, the citizen initiative, called the alternative ballot measure cynical.

"For the city to say it's OK for voters to have some say on debt for the first six months, but not after that, is just ludicrous," she said. "And not that long ago, they were saying it was impossible for voters to have a say on debt at all.

"It reflects a great deal of cynicism about the people who live in Boulder and their right to make decisions."

Setting debt limit

The alternative ballot measure would include a specific debt limit that would cover acquisition costs and other capital costs incurred in the first six months of operation of the new utility, though that amount has not been determined yet. However, it would not require the utility to go back to the voters for later debt.

The citizen initiative gives voters control over the total debt limit for a city-run utility. Boulder officials say that even Colorado's restrictive Taxpayer Bill of Rights doesn't require public utilities that pay their debts through revenue from rates to go to voters for approval. Under the citizen initiative, if, for example, there were a serious flood and Boulder wanted to borrow money to rebuild the system, it would need to wait for the next municipal election, which only occur in odd-numbered years.

Competing ballot measures

Xcel-supported citizen initiative: "Before the electric utility enterprise issues any debt, voters must approve the amount of the utility's debt limit and the total cost of debt repayment that the utility will incur, both to be stated in dollars in any ballot question; and

"The utility's service area shall not extend to areas outside the city limits unless registered electors in those areas are permitted to vote in these debt limit and repayment cost elections; and

"Such elections shall be held on the dates of general municipal elections; and

"Any brokerage fees for managing any sale of bonds or other indebtedness shall be limited to 1 percent of proceeds."

City proposal: "Any ballot measure related to the electric utility can be placed on the ballot during any election, not just a general municipal election. To the extent that customers outside the city limits wish to participate in these elections, they can request to be annexed to the city.

"The service area of a city electric utility can include customers outside city limits to the extent that the service area shall assist with the provision of a safe and reliable system for the utility's customers.

"The utility shall not make or grant any preference or advantage to any corporation or person or subject any corporation or person to any prejudice or disadvantage as to rates, charges, service, or facilities, or in any other respect including without limitation whether the customer is inside or outside the city limits. The utility shall not establish or maintain any unreasonable differences or undue preferences as to rates, charges, service, facilities, or any respect as between any class of services including without limitation whether the customer is inside or outside the city limits.

"Members of the electric utility board shall be selected from the registered electors of city or be customers of the utility.

"The city is authorized to form, purchase or otherwise acquire a light and power utility if the principal amount of the initial purchase price and capital costs projected to be incurred during the first six months after acquisition do not exceed ($ add limit of principal amount of initial bond issue) Thereafter, all debt shall only be issued in compliance the charter and other applicable laws.

"The light and power utility shall limit brokerage fees and other costs related to debt issuance to no more than commercially reasonable amounts paid by similarly situated utilities."

Atkinson said the city is free to ask voters for a debt limit that would accommodate such events and only issue the debt if or when it's needed.

The citizen initiative also requires that affected Boulder County residents be allowed to vote in a debt limit election if Boulder intends to serve customers outside its city limits.

Boulder officials have said a city utility would serve about 5,800 county households because it plans to acquire two substations that serve both city and county residents. Keeping that portion of the distribution system intact saves money and improves reliability, they argue.

Xcel Energy has asked the Colorado Public Utilities Commission to intervene and stop Boulder from taking those customers, and several hundred county residents have signed an online petition backing Xcel's position.

Boulder officials said there is no legal mechanism for them to hold an election in the county, short of annexing the affected areas, a move city officials have said they want to avoid.

County representation

The alternative ballot measure seeks to address concerns about county representation by allowing county residents to serve on the utility advisory board and requiring that city and county customers be charged the same rates.

It also contains a measure explicitly allowing the city utility to serve customers in the unincorporated area, something Boulder officials say the state constitution already permits.

Sean Brady, who lives in the unincorporated Palo Park neighborhood, said he feels the competing ballot measures would be two sides of the same coin, since neither offers recourse to Boulder County customers should they have issues with a city-run utility.

Without a City Council member to hear their concerns and represent them, Brady said he feels county residents would always be under served.

"It's sort of a taxation without representation thing," Brady said, noting that if he has a problem with Xcel, he can take his concerns to the Colorado Public Utilities Commission. "As a county resident in the Boulder municipalization scheme, who do I go to? Even with the ballot measure, we still don't have input.

"We still have no path to recourse or remedy -- short of a lawsuit."

'The right way to respond'

The city ballot measure drew praise from activists who have organized to defeat the citizen initiative.

"This ordinance is just outstanding," said John Spitzer, a member of Empower Our Future, a group that formed to defeat the Xcel-backed initiative. "It allows the city to take the offensive, and it addresses the concerns about debt limits and the customers outside the city."

Spitzer said it was the citizen initiative that was "cynical as well as hypocritical," noting that neither city nor county voters had a say in being customers of Xcel Energy.

Steve Pomerance, a former City Council member who writes a column for the Camera, had advocated placing an alternative measure on the ballot.

"I think it's the right way to respond to what is clearly a subterfuge by Xcel," he said. "The right way to respond is to put something on the ballot that is clear and works."

The Boulder City Council will hold a special meeting Wednesday to hold an initial vote on placing the charter amendment on the ballot. The council also will vote on whether the city's municipalization analysis meets the charter requirements that it provide greener energy at similar or lower rates to Xcel and to begin condemnation proceedings to acquire Xcel Energy's distribution system.

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